ECB minutes: Monetary stimulus will continue until March 2017

The European Central Bank is committed to maintaining its massive bond-buying program until its conclusion next year and stands ready to extend it, if necessary, according to the minutes of its monetary policy meeting on September 8 released Thursday.

The ECB’s governing council members last month made no changes to the bank’s monetary policy, keeping its benchmark deposit rates at -0.4 percent and its monthly bond purchases at €80 billion as part of its “quantitative easing” program.

But earlier this week, news reports that the ECB “will probably gradually wind down bond purchases before the conclusion of quantitative easing, and may do so in steps of €10 billion euros” sent eurozone bond yields sharply higher, since it is the flood of QE money that has kept them low.

The possibility that the ECB may begin to unwind its stimulus measures of pumping liquidity into the eurozone economy rattled markets because without the central bankers’ support, eurozone economies and investors would have to fend for themselves.

In addition, most investors were expecting Mario Draghi, the ECB president, to announce in September an extension of the current QE program beyond its scheduled expiration in March 2017, given the still sluggish eurozone growth and the potential negative impact of the U.K.’s Brexit vote.

That the ECB did not discuss a reversal of its money flows at all will come as a huge relief for investors. But the minutes reflect discussions among ECB officials from a month ago, so the possibility of a more recent debate underway on a “tapering” of QE cannot be ruled out.